Indian ISPs Await Green Light (cont.)

In contrast to India, other South Asian countries are well ahead in the ISP
policy game, Nandi added. Both Sri Lanka and Pakistan have de-regulated ISP
markets, with over a dozen ISPs operating in each country.

Other regulatory challenges plaguing the Indian Internet industry include
the current ban on usage of VSNL accounts for Internet telephony.

“Telecommunications companies in the U.S. and Europe are
recognising the paradigm shift in voice and data communications, and are
rapidly embracing Internet telephony–it is time we saw this in India as
well,” said Sridhar Pai, Strategic Business Manager at Internet telephony
company TeleSoft.

Based in Texas, TeleSoft’s development centre was moved to Bangalore in
1995. The company’s Internet telephony gateway products were showcased recently at CeBIT ’98 in Germany. TeleSoft’s clients are largely based in Europe and the U.S.

“IDC predicts that the Internet telephony market will account for 12
billion minutes of voice traffic by the year 2001, which is more than the
entire volume of long distance calls made from India in one year,” Pai
said. Unlike the rest of Asia (especially Singapore), the Internet
telephony market in India has been frozen, Pai observed.

It does not seem that Indian users will be able to legally avail of
Internet telephony for at least another two or three years. “But it will
happen eventually. Indian users will be able to make international calls
over the Net for Rs. 12 a minute instead of the current Rs. 60 a minute,”
Pai predicted. (Rs. 41 = 1 USD)

Pai recommended that VSNL need not look at Internet telephony as a threat–it should either get into the business itself, or allow others to do so and
take a cut from such revenues, the way British Telecom is operating in

Internet telephony is bound to receive a tremendous boost thanks to the
fact that the H323 standard was ratified by the International
Telecommunications Union three months ago, obviating the need for
proprietary standards.

A.B. Srinivasan, Chief Telecommunications Engineer at Indian Railways’
southwestern division, said the railway unit was investing heavily in 32
Mbps links via microwave and fiber optic cables. “Indian Railways is bound
to play a vital role in improving the telecommunications and Internet
infrastructure in India,” Srinivasan said.

He offered other ISPs the services of Indian Railways not just in
telecommunications infrastructure via Internet backbones, but in power
sharing, housing units, and round-the-clock technical support in urban and
rural areas.

Despite the enthusiasm shown by ISPs and companies in the ISP
infrastructure market, the current regulatory stalemate in India is
dampening some of their initial spirit when the private ISP policy was
first announced in 1997.

“It is important that obstacles to private ISPs be removed at once. Lots of
money will flow in the Internet market space in India once private ISPs
are unleashed,” Pandian concluded.

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